ASTRA EXIM P. LTD,MUMBAI vs. ITO 2(1)(1), MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखाकार सद�य राजे�� केकेकेके अनुसार लेखाकार सद�य राजे�� अनुसार PER Rajendra,A.M.- लेखाकार सद�य राजे�� लेखाकार सद�य राजे�� अनुसार अनुसार Challenging the order,dtd.20.11.2013,of CIT(A)-4,Mumbai,the assessee has filed the present appeal.Assessee-company,filed its return of income on 16.09.2010,declaring income at Rs. NIL.The assessing officer(AO)completed the assessment on 31.12.2012,u/s.143(3)of the Act, determining the income of the assessee at Rs.74,91,510/-. 2.Effective ground of appeal is about disallowance of interest Rs.72.07 lakhs.During the assessment proceedings, the AO found that the assessee had earned interest of Rs.74.91 lacs, had paid interest of Rs.72.07 lacs, that it had claimed certain expenses against interest income.Vide his order sheet dt.8.11.2012 the AO asked the assessee as to why the expenses debited to P&L account should not be disallowed as the same were not related to income earned.After considering the submission of the assessee, the AO held that it had not carried out any business activity during the year, for allowing any expenditure the first pre-condition was that the expenses should have been incurred wholly and exclusively for the purpose of business, that in the previous year the assessee had shown interest income but had not claimed interest expenses, that perusal of the balance sheet proved that assessee had not shown secure/unsecured loans. On a query by the AO the assessee stated that it had taken unsecured loans, it had paid interest on the said loans and had deducted TDS before making the payment, that the unsecured loans were shown under the head sundry creditors.The AO observed that the assessee had not taken secured/unsecured loans under consideration, that the sundry creditors shown were of earlier years, that it had paid interest of Rs.70.00 lacs to Benzo Petro International Ltd.,(BPIL) and Rs.2,07,123/- to Chandiwala Shares and Securities (CSS), that the return filed by BPIL showed that it had shown loss of Rs.1.15 crores, that the opening and closing amount in the books of the assessee in the account of BPIL was Rs.44.16crores, that the assessee had paid the interest so that BPIL could set off its losses. Finally,he disallowed the interest of Rs.72.07 lacs. 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).Before him it was argued that the AO had ignored the basic fact that there was a temporary lug in the business of the assessee,that he had not pointed out any specific defects in the claim of the assessee, during the year under consideration the assessee had received income from other sources,that the assessee had filed complete details of business expenditure, that loans had been taken during the year and had been shown in the

7419/M/13-Astra